Texas Awarded $50 Million in Massive Volkswagen Settlement

Texas Attorney General Ken Paxton is shown at a news conference in Austin on Jan. 13, 2016, to announce a new unit of the attorney general’s office dedicated to combating human trafficking.
Shelby Knowles/ Texas Tribune

Volkswagen has agreed to pay Texas $50 million in connection with the German automaker's admitted peddling of diesel vehicles rigged to surpass emissions limits, Attorney General Ken Paxton announced Tuesday.

The partial settlement is part of a larger, multibillion-dollar agreement unveiled Tuesday that awards hundreds of millions of dollars to dozens of states and includes a $10 billion buy-back program to compensate consumers who bought the vehicles. Various media reports described it as the largest auto-related class-action settlement in U.S. history.

The settlement also includes $2.7 billion for projects to mitigate environmental harm caused by excess emissions from the vehicles, with $192 million of that going to Texas, according to a news release from Paxton’s office. Another $2 billion will go toward research on zero-emissions vehicles, according to an Associated Press report.

The settlement awards 44 states, Washington, D.C., and Puerto Rico, which also sued the company, a combined $603 million, the report says. That brings the total settlements announced Tuesday to $15.3 billion.

Paxton sued Volkswagen Group of America Inc. and parent company Audi of America in October in connection with the automaker’s admitted use of software that allowed its diesel vehicles to circumvent emissions limits. The lawsuits alleged violations of the state's consumer protection laws and clean air standards. They were among hundreds filed in the United States against VW by governments and consumers.

As part of the settlements announced Tuesday, VW agreed to pay Texas $50 million in civil penalties and attorneys’ fees for its violations of the Texas Deceptive Trade Practices Act, which bans false advertising and sale of misrepresented products. About 32,000 diesel cars capable of emissions cheating have been sold in Texas, according to U.S. Environmental Protection Agency figures. That's compared to about 480,000 nationwide and 11 million globally.

“For years, Volkswagen intentionally misled consumers about the environmental and performance qualities of the vehicles they sold in Texas,” Paxton said in a statement. “When companies willfully violate the public’s trust, we will hold these entities responsible. This settlement will both compensate the victims of Volkswagen’s fraud and punish the company enough to deter future fraud.”

He noted Texas has not yet resolved claims that VW violated state clean air laws, and that Texas continues to pursue related penalties. A Paxton spokeswoman would not say how much those might amount to.

VW is still facing billions more in fines and penalties as well as possible criminal charges, according to the Associated Press report, which noted that the automaker has admitted to programming 2-liter diesels to turn on emissions controls during government lab tests and turn them off while on the road.

VW may still come up with a way to bring the vehicles into compliance with environmental regulations, the report noted, but — as part of Tuesday's settlement — it must offer to buy back affected cars or terminate leases in the meantime.

Owners who want to sell would get the clean trade-in value from before the scandal became public on Sept. 18, 2015, the report said, noting that the average value of a VW diesel car has dropped 19 percent since just before the scandal began. In August 2015, the average was $13,196; in May 2016 was $10,674, according to Kelley Blue Book, the report said.

Several local governments in Texas, including Harris County, have also sued VW — over objections from Paxton — but they were not included in the settlements announced Tuesday. The Harris County lawsuit is pending in Travis County district court.

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